PMEGP is a subsidy loan scheme that was initiated by Khadi and Village Industries Commission in India. It stands for Prime Minister Employment Generation Programme. It works as a lending agency at national level. The state level schemes are under the state KVIC Directorates, KVIBs The state Khadi and Village Industries Boards and DICs that are Districts Industries Centers and Banks.
All you need to do is to follow the path that I am writing below so that you can receive subsidy from PMEGP.
Table of Contents
PMEGP Subsidy Claim
- Create a business idea. Think about starting a new business enterprise in business or manufacturing sector.
- Look for the suitable location for your business. Decide about the plant and machinery, building etc and look for the best possible site.
- Create a PMEGP project Report or a solid business plan so that you can present details in the PMEGP loan application form as well.
- Apply online for PMEGP loan from the official website of KVIC that us KVIC Online.
- The District Level Task Force Committee conducts an interview. You have to appear for this. It evaluates your business plan and if you are eligible, your loan application is sent to concerned bank.
- Now you can visit the bank with your documents. Your job here is to convince and motivate the banker to approve your loan. If it is done, your loan is sanctioned in a few days after verification.
- Meanwhile, you need to arrange the beneficiary contribution that is 5 to 10% of the project cost.
- When the bank tells you about the approval of loan, you are asked to attend a training of atleast 2 weeks that is Entrepreneur Development Training after that the loan amount is credit in your bank account.
- You can get the loan subsidy when you are done with the EDP training and present the certificate before the bank. The PMEGP Subsidy Claim is not instant. The amount of subsidy is kept as Term Deposit Receipt for next 3 years.
- The subsidy is credited to your bank account exactly after three years of first disbursement. Before crediting this amount to your account the bank assures that your unit is still existing or not.
- You will no more be asked to pay rate of interest for the subsidy amount from the date you start your subsidy.
- The general category gets 15% subsidy in Urban areas and 25% in Rural areas. The special category candidates get 35% subsidy in Rural areas and 25% in Urban areas.
The Main Objective of PMEGP
The foremost objective of PMEGP loan scheme is to create employment opportunities for the entrepreneurs in both rural and urban areas. It s applicable in the entire country. So the applicants can now set up their own units and self employment ventures and projects.
PMEGP Subsidy Claim Eligibility Criteria
- Only an individual who is 18 years and above of age can get it.
- You cannot conceal any information from the bank regarding your project or business plan under PMEGP.
- If your project cost is Rs 10 lakh for business or service sector and manufacturing unit cost is Rs 25 lakh, then you can get the PMEGP Subsidy loan scheme.
- Your education qualifications should be atleast 8th Pass.
- You can get the PMEGP Subsidy claim for the latest and new projects only after the loan is approved.
- Choose the institution that has been registered under societies registration Act 1960.
PMEGP Subsidy Rate
The rate of subsidy varies from project to project and location of he project and its type.
If you are starting a business plan for business or service sector the subsidy rate is different from the manufacturing project. The subsidy rate for urban and rural areas also vary.
It is different for general category applicants in the country and special category ones too.
The Urban area applicants get subsidy of 15% to 25%. The Rural area applicants get subsidy between 25% to 35%.
Special category applicants like SC, BC, ST, OBC, Minorities, Women, Ex-Servicemen, Hill and Border Area, Physically handicapped also have different percentage for PMEGP Subsidy Claim.
PMEGP Subsidy Adjustment
The Ministry Of MSME communicates to the banks and beneficiaries that Marginal Money or the PMEGP Subsidy can be adjusted according to the compliance and connection.
If I talk about the admissible marginal money on working capital or sanctioned cash credit money then PMEGP lays a guideline that is described below.
If there is 100% sanctioned cash credit amount for working capital of a beneficiary atleast once or the working capital availability is atleast 75% then the PMEGP Subsidy for marginal money will be calculated on 100% of the amount sanctioned limit. The main concern is that the average availment should be in between 75% to 100%. This is because the subsidy is calculated on 100% cash credit limit.
The average working capital is calculated on daily average basis of the total cash credit limit availed.
The average working capital is calculated for a period that starts when you withdraw the cash credit for the first time till this 3 years period completes. This period starts from the first disbursement of the term loan or the term loan’s ending date, whichever is earlier.
Adjustment of PMEGP Subsidy
- Working capital marginal money subsidy adjustment is the refund of marginal money subsidy that is the difference of amount between sanctioned cash credit subsidy and the admissible limit subsidy.
- Marginal Money adjustment process should begin by the field directors working at KVIC along with the state KVIBs and DICs.
- MSME directives need to be kept in view while adjusting the marginal money subsidy of PMEGP units.
- While the verification is going on, it is found that the units are not as per the norms, the marginal money is called back considering the unit ineligible PMEGP units by the banks within a short span of time without any failure. The same is then refunded to KVIC.
- If the units are not traced, FIR is made for the same in consultation with the legal advocate.
- The State Directors must comply with the guidelines mentioned here and complete the process to issue adjusment letter for the eligible cases of PMEGP Units.
- If there is any delay in the process or failure, the concern is taken seriously and the concerned person on job is held responsible for the same.
- The zonal heads and CEO also monitor the compliance of the mentioned guidelines through conferences or video monitoring.
Beneficiary Contribution For PMEGP Loan
It also varies depending upon the category, location and other criteria.
The contribution for general category applicants is fixed to be 105 and for the special category people it is 5%.
The maximum cost of the business plan needs to be Rs 10 Lakh and the for manufacturing units it is 25Lakh Rupees. The balance amount of the total project cost is paid by the bank according to the terms and conditions of the bank.
About PMEGP Subsidy Bank Finance
The Bank can sanction 90% of the total cost listed in your project for general category people and 95% in case of special category applicants. The bank disburses full loan amount subsidy for the beneficiary to set up his new unit.
The bank finances the capital expenditure as a term loan and cash credit for working capital. There are a few activities that are not the part of this PMEGP subsidy claim.
The business or industry that relates to saughter of meat. Yes, if any company deals in processing, canning or serving meat etc. If any company that relates to manufacturing of intoxicant items like cigarette, tobacco etc is also excluded from the PMEGP loan scheme.
The hotels and restaurants who serve the meat, alcohol, liquor, or other insignificant eatable are not in this list.
The business house that relates to cultivation of tea, coffee, rubber etc are allowed for loan under this scheme. The activities like horticulture, floriculture etc are also in the list for PMEGP loan and PMEGP Subsidy claim.
The activities that cause environmental pollution are not in the scheme for PMEGP applicants.